Agenda item

External Audit Progress Report

The report summarises the auditing activities
undertaken by KPMG in the period September 2017 to December 2017
and provides an overview of actions

to be completed by the next meeting of the
Audit Committee.

Minutes:

Andrew Sayers (Partner, KPMG - External Audit)
introduced the report which provided the Committee with external
audit updates since September 2017 and the work planned before the
next meeting on 10 January 2018.

He drew Members’ attention to the
completion of the work on the Housing Benefit Subsidy claim and
Teachers’ Pension Return which was expected to be certified
by 30 November 2017, and added that a report would be provided on
the detailed findings at the next Audit Advisory Committee meeting.
He also explained that the five objections which related to the
payment made to the Council’s former Human Resources (HR)
Director had not been upheld, and that the decision letters (which
set out the external auditor’s reasons in detail) had been
sent to the objectors individually on the afternoon of the meeting.
He added that although the objections had not been upheld he had
made three recommendations for improvement. He also specified that the outstanding objection
which related to the Lender Option Borrower Option (LOBO) loans
remained in the process of being reviewed.

Members requested clarity on the process for
how the determination letters to objectors were issued by the
external auditor. There were specific questions raised on whether
Audit Advisory Committee Members should have sight of the
auditor’s reasoning for the objections not being upheld, and
to what extent the information would be made available to the
public. Conrad Hall clarified that there were strict legal
restrictions on how the information could be shared. These restrictions flow from the overall legal
framework for managing objections to the accounts, rather than
because of the particular content of these letters. Conrad Hall
added that the restrictions on circulating the letters applied to
anyone in receipt of them, therefore including the objectors, and
that a breach of these restrictions would potentially constitute a
criminal offence. He outlined that information that was already in
the public domain on the issue could of course be shared, and that
this therefore included the fact that the objections had not been
upheld and that recommendations for improvement had been made (as
these facts had been disclosed earlier by Andrew
Sayers). Conrad Hall added that the
Council would consider an additional public response, but would
first need to take careful legal advice which it had not yet been
possible to do as the determination letters had only been received
about three hours before the start of the meeting. Andrew Sayers
added that the objectors themselves had a legal responsibility not
to share the response, and that the potential criminal consequences
of doing so had been made clear to them. A Member of the Committee
placed on record their concern at members of the Audit Advisory
Committee not being able to access the response even if on a
limited or restricted basis.

A question was also raised on whether a final
figure on the External Auditor’s fees had yet been reached.
Andrew Sayers responded that he did not have a figure at the time
of the meeting, but would circulate it to members of the Committee
as soon as possible.

It was RESOLVED that:

(i) The
External Audit Progress Report by noted;

(ii) An additional
summary of information (which could be legally shared) on the
determination not to uphold to objections in relation to a payment
to the Council’s former HR Director, be circulated to
Members. The summary would also include guidance on the legal
restrictions on sharing the Auditor’s full response; and

(iii) The figure for the
External Auditor’s fees be circulated to members of the
Committee once finalised.